Dairylea proposes merger with DFA

Published:October 22, 2013 9:12AM

Northeast dairy co-op Dairylea's board of directors has proposed merging with longtime partner Dairy Farmers of America to give its members access to growing national and international markets. In exchange, DFA members Dairylea's customer relationships, enhanced farm services and expanded access to capital. Dairylea members will vote on the proposal in February.

Dairylea Cooperative, with more than 1,200 member dairies across the Northeast, is proposing to merge with Dairy Farmers of America and its more than 8,000 member farms.

The co-op’s board of directors endorsed the merger during Dairylea’s annual meeting Oct. 14, and Dairylea members will be asked to approve the proposal in February.

Dairylea has spent the last three years examining how to best position its members for the future by generating value beyond the traditional co-op structure. One option identified was creating market opportunities with investments in processing, according to a joint press release from Dairylea and DFA.

Dairylea has been a member cooperative of DFA since 2002.The proposed merger will provide Dairylea members access to growing national and international milk markets, ongoing patronage dividends, tax benefits and other opportunities.

Additionally, Dairylea members will share the returns from the co-op’s value-added products, plants and partners that comprise DFA’s commercial division, the press release stated.

Conversely, the merger provides DFA members with long-standing customer relationships in the Northeast marketplace, enhanced farm services and expanded access to capital to facilitate strategic growth.

“In many ways, a merger with DFA is simply a continuation of the working relationship that Dairylea has forged with DFA during the past 12 years,” Rick Smith, DFA president and chief executive officer, said in the release.

Working together, Dairylea and DFA have created efficiencies in milk assembly, transportation and marketing, as well as joint management of farm services and membership operations in the Northeast. These cost-efficiencies are expected to continue and grow following the merger.

Prior to the vote in February, a series of informational sessions will be held to provide Dairylea members with a comprehensive overview of the proposed merger, a more detailed explanation of the voting process and the chance to have their questions answered.